Sebi Introduces UPI Mechanism For Individual Investments In InvITs

Individual investors wanting to apply in the public offerings of infrastructure investment trusts (InvITs) will now have the facility to block money through the Unified Payments Interface (UPI) for application values of up to Rs 5 lakh, the Securities and Exchange Board of India (Sebi) has announced.

An investor can apply for public issue of units of InvIT through self-certified syndicate banks (SCSBs) or intermediaries, syndicate members, registered stockbrokers, registrar and transfer agent, and depository participants, Sebi announced in the circular.

It added that stock exchanges, depositories, National Payments Corporation of India (NPCI), sponsor banks, and SCSBs must make the necessary changes in order to implement the changes on August 1, 2022.

Hereby are the three processes that an investor can follow, the Sebi circular added.

1] An investor can physically submit the bid-cum-application form, with ASBA as the sole payment mechanism, at the branch of an SCSB, i.e. the investor’s bank.

2] An investor can submit the completed bid-cum-application form, along with bank account information, to the above-mentioned intermediaries for blocking the fund. The intermediary must upload the bid to the stock exchange bidding platform and forward the application form to an SCSB branch for the funds to be blocked.

3] If the application value is Rs 5 lakh or less, an investor can submit the bid-cum-application form to an SCSB or the intermediaries mentioned above, and use his/her UPI ID linked to the bank account to block the funds. The bid must be uploaded to the stock exchange bidding platform by the intermediary. In this case, the application amount would be blocked via the UPI mechanism.

Sebi said the provisions of this circular will apply to a public offering of InvIT units under the Sebi (Infrastructure Investment Trusts) Regulations, 2014 that begins on or after August 1, 2022.

The market regulator said that they came to this decision following consultations with other stakeholders. 

The circular can be found on the Sebi website at www.sebi.gov.in under the headings Legal Framework -> Circulars.

Infrastructure Investment Trusts (InvITs) are investment vehicles that operate similarly to mutual funds. Typically, such a vehicle is intended to pool money from multiple investors in small amounts for investment in income-generating assets. InvITs can be considered as a modified version of real estate investment trusts (REITs) tailored to the specific needs of the infrastructure sector.

Way back in September 2014, Sebi had published the Sebi (Infrastructure Investment Trusts) Regulations, 2014, which provided for the registration and regulation of InvITs in India.